FSA

Question 1

What is the formula for calculating diluted eps?

Answer 1

(NI - Pref D) + (convertible pref D) + (Conv debt interest) (1-T)

/

(Weighted average shs) + (shs from conv of pref shs) + (shs from conv of pref debt) (Shs issuable from conv of options)

Question 2

What is OCI?

Answer 2

Other comprehensive income includes gains or losses on available-for-sale (AFS) securities and translation adjustments on foreign subsidiaries.

Question 3

What are liquidity and solvency ratios?

Answer 3

Current ratio

Cash ratio

Quick ratio

Total debt

Long-term debt-to-equity ratio

Debt-to-equity ratio

Financial leverage ratio = Assets / equity

Question 4

Calculate FCFE

Answer 4

NI + NCC - Chg WC - Chg FC + Chg debt

Question 5

Calculate FCFF

Answer 5

NI + NCC - Chg WC - Chg FC + Chg debt

Question 6

What is the difference between operating profit margin and net profit margin

Answer 6

Operating margin = operating income / revenue

deduct operating expenses only eg cogs and operating expenses

Net profit margin = NI (subtract all expensese from revenue) / Revenue

Question 7

how do you treat the LIFO reserve for inventory and COGS?

Answer 7

Inventory - Add it
COGS - Add the decrease
Cash = lifo reserve x (1-tax)